IFRS 18 is not yet mandatory, but the implementation work should already be under way. The new Standard on presentation and disclosure in financial statements applies to annual reporting periods beginning on or after 1 January 2027, with earlier application permitted. It replaces IAS 1 and introduces new presentation and disclosure requirements that will affect how financial performance is explained to users. Read the IFRS Foundation overview.

For South African companies reporting under IFRS, the practical question is no longer whether IFRS 18 is relevant. The question is whether the finance function has enough time to understand the changes, update its reporting processes and prepare comparative information.

What IFRS 18 changes

IFRS 18 introduces defined subtotals including operating profit and profit before financing and income taxes. It also requires disclosures about management-defined performance measures, which are company-specific subtotals used in public communications to present management’s view of an aspect of financial performance.

The Standard further introduces principles for aggregating and disaggregating information. This means finance teams may need to reconsider whether line items and expense information are presented at an appropriate level of detail in the financial statements and notes.

These requirements do not necessarily change the underlying recognition or measurement of every transaction. However, they can change the structure of the statement of profit or loss, the supporting note disclosures and the relationship between published financial statements and other performance communications.

Why the 2026 close matters

IFRS 18 requires comparative amounts for the preceding period and is applied retrospectively in the initial year of application. For a company with a 31 December year-end, this makes the 2026 financial information an important part of the transition process, even though the first mandatory annual reporting period is 2027. The IFRS Foundation’s implementation summary explains the comparative-information requirement.

In practical terms, management should avoid treating IFRS 18 as a project that begins after the 2026 accounts are finalised. The 2026 close can provide the first realistic opportunity to test classifications, identify recurring adjustments and document the calculation of non-standard subtotals.

Who is affected

The most direct impact will be on entities preparing financial statements under IFRS, including groups, listed entities and other reporting entities that use IFRS-based financial information. The effect will vary according to the entity’s current reporting practices, systems, public communications and level of aggregation.

Smaller finance teams may be affected if management reports, board packs, lender updates or investor materials use measures such as adjusted operating profit or adjusted earnings that are not specified by IFRS Accounting Standards. Such measures may need to be assessed against the definition of management-defined performance measures and reconciled in the notes where the requirements apply. Review the IFRS Foundation’s key terms.

What businesses should check now

  • List every subtotal used in financial statements, management accounts, board papers and public communications.
  • Map income and expenses against the operating, investing and financing categories.
  • Review whether current line items are aggregated or disaggregated appropriately.
  • Identify data gaps in the general ledger, reporting packs and consolidation systems.
  • Test how comparative information could be reconstructed for the first IFRS 18 year.
  • Assign responsibility for reviewing labels, reconciliations and note disclosures.

Practical next steps

Start with a short diagnostic rather than waiting for the next audit. Compare the current statement of profit or loss with the IFRS 18 requirements, document areas requiring judgement and discuss the proposed approach with the external auditor early.

Businesses can also use the 2026 year-end timetable to approve a transition plan, train relevant staff and build IFRS 18 checks into the monthly close. For support with reporting processes and financial controls, explore YFP’s accounting and advisory services.